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Exhibit: Guns and Butter

-(Exhibit: Guns and Butter) The maximum amounts of guns and butter this economy can produce is:
A) 18 units of guns and 0 units of butter per period.
B) 0 units of guns and 20 units of butter per period.
C) 16 units of guns and 12 units of butter per period.
D) all of the above combinations are maximum possible combinations.

Question

Use the following to answer question(s): 
Exhibit: Guns and Butter
 
-(Exhibit: Guns and Butter) The maximum amounts of guns and butter this economy can produce is:
A) 18 units of guns and 0 units of butter per period. 
B) 0 units of guns and 20 units of butter per period. 
C) 16 units of guns and 12 units of butter per period. 
D) all of the above combinations are maximum possible combinations.

Quizplus · Accepted Answer

The choices A, B, and C each represent points on the production possibility frontier (PPF) for this economy, indicating the maximum possible production combinations of guns and butter. The PPF illustrates the trade-offs in production choices between two goods, showing the maximum amount of one good that can be produced for any given amount of the other. Since all the options represent different combinations along this frontier, they are all maximum possible combinations.

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